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Effective management structures

The elevation in decision-making observed through Capability Reviews and the employee census may also be symptomatic of inefficient management structures. The APS of the future will be significantly different from today and developing more effective management structures will support future change. In broad terms, these structures would have fewer management layers and—most commonly—a wider span of management (managers with a greater number of people reporting to them).

A report by the National Commission of Audit (CoA) asserted that ‘high performing organisations generally have fewer layers of employee classification and wider spans of control’. It suggested that ‘best practice’ benchmarks for spans of management, depending on agency function (agency type), range from five to 10 employees per manager. The CoA considered there was significant ‘scope to improve structures within many Commonwealth organisations’. The report concluded that current staffing structures are ‘top-heavy’ resulting in mid-level managers with comparatively few people reporting directly to them.3

One source of evidence used by the CoA to support this contention was the relative growth in the size of the EL classifications. For example, as at June 2014, 27.7% of the ongoing workforce held an EL position compared to 17.5% in 1998. The CoA acknowledged a range of reasons for the growth in middle-level management, including:

changes to APS recruitment practices to employ more highly qualified and skilled staff

limited flexibility for remuneration, resulting in promotion being used as a means of attracting and retaining the right staff

the gradual loss of lower-level APS positions as activities have been replaced with technological solutions or outsourced.

Effective management structures support improved organisational performance in a number of ways, including through streamlined decision making, improved communication and accountability, more effective resource prioritisation and a more engaged and productive workforce.

It is also the case that top-heavy management structures are costly in terms of payroll and, as observed in Capability Reviews, can reduce the effective use of human capital. However, a focus on changing management structures using an approach that seeks to reduce overall management numbers as a cost-saving measure—in isolation of broader strategic direction and structural change—has the potential to do more harm than good. An agency's workforce capability may be adversely impacted, for example, by unallocated capacity, a patchwork of mismatched capability resulting from the uncontrolled flow of skills and experience, or classification levels that fail to reflect work value.

There is no single model for creating more effective management structures. There are, however, key elements that contribute to best practice organisational design, including that:

structure is aligned with strategy

decisions are made at the appropriate level

roles reflect work value, and individuals are in the right roles with the required capabilities

the approach is systematic and aims to develop a flexible, fit-for-purpose structure that supports business needs.

To better understand span of management in the APS, the employee census asked employees to indicate whether they have performance management responsibilities. Performance management responsibility was used as a proxy measure for actual span of management. It also provided the opportunity for a more refined understanding of the issues. Table 9.3 shows that 34% of EL employees report they have no direct performance management responsibility; with the bulk of these employees at the EL 1 classification.

In accordance with APS work-level standards, the work of an EL 1 may be characterised, for example, by the management of a number of employees performing diverse tasks. Consequently, it is surprising that 43% of EL 1 employees indicated they do not have performance management responsibilities.

Where EL 1 employees have performance management responsibilities, it is generally only for one or two employees. EL 2 and SES employees were more likely to have direct performance management responsibility for larger numbers of employees.

Table 9.3. Management spans of control, 2014

Performance management responsibility

EL 1 (%)

EL 2 (%)

EL 1 & 2 (%)

SES (%)

Source: Employee census

None

43

16

34

5

1–2 employees

30

17

26

7

3–5 employees

17

35

22

37

6–10 employees

7

21

11

34

11 or more employees

3

11

6

18

Table 9.4 shows the distribution of EL 1 performance management responsibility by agency function. The nature of the work performed by an agency will likely have an impact on the opportunities to exercise performance management responsibility. More than half of EL 1 employees in regulatory agencies indicated they do not exercise performance management responsibility; however, there are similarly large proportions across all agency functions.

The same analysis for the EL 2 classification shows a higher proportion of employees without performance management responsibility in agencies with a predominantly regulatory function (30%); however, smaller and larger operational agencies have a similar proportion (27% for both).

APS work-level standards provide the framework for understanding the responsibilities required of employees at each classification level. The substantial proportion of EL employees without performance management responsibility requires closer examination in relation to this framework. It adds further weight to the CoA finding that there is scope to improve management structures in APS agencies.

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The Australian Public Service Commission (APSC) is a central agency within the Prime Minister and Cabinet portfolio. The Commission supports two statutory office holders: the Australian Public Service Commissioner - who is also agency head - and the Merit Protection Commissioner. Their functions are set out in sections 41(1) and 50(1), respectively, of the Public Service Act 1999.